Airport operator DAA sells €400m bond hot on heels of ESB

Corporate debt in demand as ECB prepares to buy euro zone company bonds

State-owned airport operator DAA returned to the bond market for the first time in eight years on Wednesday, selling €400 million of debt as it seeks to buy back more expensive near-term borrowings and prepare to develop a new runway in Dublin.

DAA, responsible for the Dublin and Cork airports, said that holders of some €259.4 millon of its remaining €550 million of 2018 bonds took up an offer in the past week to sell their notes back to the company.

While the 2018 securities had a coupon, or interest rate, of 6.59 per cent, the new bonds, which mature in 2028, were priced to yield 1.554 per cent per annum.

The move comes a day after fellow State-owned group ESB sold a €600 million 15-year bond as it took advantage of surging demand for corporate debt as the European Central Bank prepares to start buying investment grade company bonds this month.


Corporate bonds issued in euros are the latest addition to a growing list of assets the ECB is buying as part of its €1.74 trillion effort to boost economic growth in the euro zone via lower borrowing costs.

“This was the first euro issue from an airport since July 2015,” said Joseph McGinley, an analyst with Davy in Dublin, of the DAA bond sale.

The lower coupon on the new debt “represents a significant cash saving for the airport, as well as securing its long-term financing”, Mr McGinley said.

Investors in the bond would have been attracted by the company’s regulated income, increasing passenger numbers and the fact that it was able to cut its borrowings during the downturn, he said.

Barclays, BNP Paribas and Royal Bank of Scotland were bookrunners on the DAA bond sale, while Goodbody Stockbrokers and Bank of Ireland are understood to have been co-managers.

DAA plans to build a second runway by 2020 to cater for growing demand there.

More than 25 million passengers passed through Dublin Airport in 2015 and it is set to break that record this year as customers such as Ryanair and Aer Lingus add new routes and boost capacity.

The runway will cost €320 million, the DAA said in April. Airlines support the project but have challenged the cost, which was originally set at €243 million in 2014.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times